Navigating in the dynamic environment by managing organizational change capacity - Emerging change practices in the VUCA environment

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master_Perälä_Jenni_2025.pdf (959.2 KB)

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School of Business | Master's thesis
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2025-09-25

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Mcode

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Master's programme in People Management and Organizational Development

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en

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71

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Abstract

Organizations today operate in an increasingly dynamic and unpredictable environment, characterized by global disruptions, and shifting geopolitical conditions. The VUCA (Volatile, Uncertain, Complex, Ambiguous) environment places new demands on organizations capacity to change in this dynamic environment. In this context, understanding how leaders perceive the dynamic environment and manage Organizational Change Capacity (OCC) has become critical for sustaining competitiveness. The purpose of this thesis is to examine how Finnish top leaders perceive and adapt to dynamic environment, and what practices they identify as essential for developing organizational change capacity. By doing so, the study addresses a gap in the current research, which has rarely explored organizational change capacity within the VUCA context. The study draws on the Dynamic Capabilities literature, with a particular emphasis on organizational change capacity theory. This research is based on qualitative content analysis from the series Johdon Agendalla (On the Leadership Agenda), which features top leaders from different industries in Finland. The results indicate that Finnish top leaders perceive the current business environment as increasingly unstable, which reflects the characteristics of a VUCA environment. Consequently, leaders are actively sensing the environment to sustain competitiveness. Organizational adaptability and strategic flexibility were emphasized in the process of seizing opportunities. Leaders’ narratives highlighted their efforts to transform organizations by embedding change capacity into structures, culture, and daily routines. Several constraints were identified that hindered the implementation of OCC practices. This thesis deepens the understanding of how top leaders perceive and respond to complex environmental demands. The findings suggest that while leaders possess the awareness and intent to build more adaptive organizations, existing processes and resources are not always caught up with the demands of a dynamic environment. This thesis advances the academic discussion by demonstrating that Finnish top leaders view organizational change capacity not only as a strategic necessity but also as an ongoing operational practice. By linking OCC theory more closely with dynamic capabilities research, this study offers a more practice-oriented understanding of how leaders navigate sensing, seizing, and transforming within a VUCA environment.

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Supervisor

Eräranta, Kirsi

Keywords

organizational change capacity, VUCA environment, dynamic environment, dynamic capabilities, strategic flexibility, organizational adaptability

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https://urn.fi/URN:NBN:fi:aalto-202510178254

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[gradu] Kauppakorkeakoulu / BIZ